| Normative accounting theory can not explain and predict the events that occur in the real practice of accounting theory than the positive accounting th?ory. In positive accounting theory, earnings management is something that needs special attention by accountant and arranger accounting standard. Earnings management is wider than income smoothing. Earnings management Is the action of ma?ager that is intended to increase (decrease) current reported earnings or any action on the part of management which affects repo?ted income and which provides no true economic advantage to the organization. Income smoothing a means used by management to diminish the variability of stream reported income number relative to some perceived target stream by manipulation of artificial (accounting) or real (transactional) variables. |